Over the years, there have been numerous studies on process improvement methodologies, and the Theory of Constraints is one of the most popular ones. Theory of Constraints, developed by Dr. Eliyahu Goldratt, has become part of management best practices and, consequently, a necessary study for many industries.
Its biggest plus point is the focus on a particular inefficiency in a process, which helps drive improvements as rapidly as possible. This guide explains what the theory is and the five focusing steps that define it.
What is the Theory of Constraints?
In 1984, Dr. Eliyahu Goldratt released his book, ‘The Goal.’ It featured a production manager who encountered many challenges but his unyielding focus on ‘the goal’ finally saw him succeed.
The strategies and tools that he used, which helped improve the entire company, were dubbed the Theory of Constraints. In this theory, the argument is that every organisation with a complex system has a constraint or bottleneck that prevents it from reaching its potential.
A constraint is considered the weakest link in the chain. Therefore, the theory of constraints posits that working on the constraint stops it from being a limiting factor. The manufacturing industry refers to a constraint as a bottleneck. Because the system consists of linked processes, identifying the bottleneck and clearing it is the only way to improve. The theory of constraints provides tools that businesses in different sectors can use to enhance processes.
The Five Focusing Steps
The theory’s advantage is that it allows you to concentrate on the problem areas and find actionable solutions. It provides a 5-stage methodology to achieve that. These are;
Identify the Constraint
If you are to boost processes, whether, in manufacturing or other sectors, you must know where to channel your energy. For that, you should know where the challenge lies. Look for anything that slows down efforts to accomplish a particular goal. Businesses can use various tools to check for constraints.
Exploit
Don’t look at a constraint as an obstacle, but as an opportunity instead. Rather than investing more resources to solve the inefficiencies, use what is already available. Squeeze the constraint for all it’s worth. In most cases, organisations fail to utilise constraints to their full potential. The reasons for this vary. Therefore, identify what they are in your case and find workarounds.
Subordinate
In the subordination stage, you have other elements supporting the main one towards a common objective. So, evaluate all the other aspects, called non-constraints, and ensure that they align with the constraint. The point is to make certain that non-constraints don’t produce more than they should, which causes an imbalance.
Elevate
After exhausting all the resources and the constraint still remains, it’s time to elevate it by investing more of whatever is necessary. Some businesses make the mistake of jumping straight to this stage. Work on elevating the constraint until it is fixed.
Prevent Inertia
After resolving the current constraint, move to the next one. This process is continuous and that means not allowing inertia to set in.
Importance of Theory of Constraints
Why should an organisation spend resources on the Theory of Constraints? What role does it play? For one, the strategy channels improvements on the crucial areas that impact revenue generation. Through Theory of Constraints, you get to pinpoint the problems that are slowing down process improvement. It’s how a business knows where to focus solutions. The theory of Constraints is cyclical, which means that it never stops. Once you tackle one constraint, you handle the next.
The theory also includes Thinking Processes, a cause and effect tool that is designed to solve complex systems. With the different tools, you get to answer three vital questions – what has to change, what it should change to and necessary actions to cause that change.
Constraints are a part of any organisation and the Theory of Constraints offers effective ways to solve them to boost profits.